* Western Digital ( WDC ), Sandisk ( SNDK ) slide despite upbeat forecasts

* AppLovin ( APP ) down after Q2 revenue misses estimates

* Indexes: Dow up 0.08%, S&P up 0.08%, Nasdaq down 0.05%

(Updates for market open)

By Johann M Cherian and Shashwat Chauhan

Aug 6 (Reuters) - The S&P 500 was flat in volatile trading

on Thursday, with tech stocks down as Western Digital ( WDC ) and

Sandisk's ( SNDK ) strong forecasts failed to impress, countering gains

across other sectors.

Data storage company Western Digital ( WDC ) lost 18.5% and

memory chip maker Sandisk ( SNDK ) dropped 11.3% in early

trading, after having shot up 200% and 400% this year. Both

companies forecast quarterly revenue above expectations, betting

on strong AI-driven demand.

"There are just incredible expectations and chips have done

so well this year through June so there's just some digestion

going on in the market," said Hank Smith, director and head of

investment strategy at Haverford Trust.

The sector was broadly under pressure, with shares of Intel ( INTC )

and AMD lower and the Philadelphia chips index

down 1.5%.

Another point of weakness was software stocks, with

Atlassian ( TEAM ), Salesforce ( CRM ), Adobe and

Zscaler ( ZS ) all down sharply following earnings reports from

a few companies in the sector.

AppLovin ( APP ) dropped 17.4% as the marketing platform

missed Wall Street estimates for quarterly revenue, while

Datadog ( DDOG ) lost 16.7% after the cloud security firm said

it expects revenue growth to slow in the third quarter.

The rest of the market, meanwhile, was mostly higher, with

nine of the 11 S&P sectors trading up. Energy, consumer

staples and healthcare were leading gains.

Parker-Hannifin ( PH ) rose 8.5% as the motion and control

tech firm forecast full-year profit above estimates, while

lithium miner Albemarle rose 6.7% after beating

quarterly profit estimates.

Megacap stocks were mostly higher, with Microsoft ( MSFT )

and Amazon ( AMZN ) up around 1% each.

SpaceX rose 2% ahead of the space conglomerate's

first post-IPO share lockup expiry. The broader AI-linked group

of stocks showed signs of cooling from a rally.

Strong earnings from tech leaders this reporting season have

restored investor confidence that AI investments were being

monetized, which helped the benchmark S&P 500 and the

blue-chip Dow reclaim record highs earlier this week.

The Nasdaq is about 3% away from an all-time high,

bouncing off last week's lows, which saw the index coming close

to confirming a correction.

At 9:37 a.m. ET, the Dow Jones Industrial Average

rose 44.19 points, or 0.08%, to 54,393.31, the S&P 500

gained 5.82 points, or 0.08%, to 7,729.37 and the Nasdaq

Composite lost 14.59 points, or 0.05%, to 26,350.26.

Brent crude prices traded in a tight range near $80

a barrel as markets were keen on any signs of a deal between

Iran and the United States. A proposed deal between Iran and

Oman would give Tehran control over ships entering the Gulf

through the Strait of Hormuz, sources told Reuters.

Meanwhile, data showed the number of Americans filing claims

for unemployment benefits increased slightly last week. This

comes ahead of nonfarm payrolls figures for July due on Friday.

Friday's jobs report could be key in assessing the Federal

Reserve's future interest rate path, as data points have

garnered more attention since new Chairman Kevin Warsh has

dialed back any forward guidance.

Advancing issues outnumbered decliners by a 1.07-to-1 ratio

on the NYSE, while declining issues outnumbered advancers by a

1.39-to-1 ratio on the Nasdaq.

The S&P 500 posted 25 new 52-week highs and two new lows,

while the Nasdaq Composite recorded 72 new highs and 30 new

lows.